Paying into a pension when not working and already taking from a SIPP

Daveinlincoln

Hi all,
Is it possible to pay into a pension if you're not working and are already drawing a monthly income from my SIPP ?

My situation is I'm 55 and not working ,i don't claim any benefits.

I have already taken the TFLS from my 2 sipps and I'm taking a monthly income of £790 from the sipp (its this amount so as to stay below the tax threshold and the national insurance threshold.)

I have about 30k in savings and I seem to remember reading somewhere that i am still allowed to save a small amount into a pension and still get some tax relief....is this correct and if so how much can I save? also which low cost SIPP provider would be ideal for this?

Thanks in advance for any info you can give.

eskbanker

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

If you do not pay Income Tax

You still automatically get tax relief at 20% on the first £2,880 you pay into a pension each tax year (6 April to 5 April) if both of the following apply to you:

• you do not pay Income Tax, for example because you’re on a low income
• your pension provider claims tax relief for you at a rate of 20% (relief at source)

Marcon

Daveinlincoln said:

Hi all,
Is it possible to pay into a pension if you're not working and are already drawing a monthly income from my SIPP ?

My situation is I'm 55 and not working ,i don't claim any benefits.

I have already taken the TFLS from my 2 sipps and I'm taking a monthly income of £790 from the sipp (its this amount so as to stay below the tax threshold and the national insurance threshold.)

I have about 30k in savings and I seem to remember reading somewhere that i am still allowed to save a small amount into a pension and still get some tax relief....is this correct and if so how much can I save? also which low cost SIPP provider would be ideal for this?

Thanks in advance for any info you can give.

You can pay in £2,880 and the pension provider then claims basic rate tax on your behalf (even for non-taxpayers) and adds this directly to the pension pot, bringing it up to the maximum of £3,600.

This link might help with your choice: https://www.moneysavingexpert.com/savings/cheap-sipps/

If you start earning again, you can pay in more, but are limited to the Money Purchase Annual Allowance of £4,000 (including tax relief/any employer contribution).

Daveinlincoln

Thanks for the replies....so,its basically £720 for free ?(minus charges). 

Sounds like a decent deal to me.

Albermarle

Daveinlincoln said:

Thanks for the replies....so,its basically £720 for free ?(minus charges). 

Sounds like a decent deal to me.

The charges should be minimal if you go with a SIPP provider who charges a % of the ( small ) pot . Best known one for this procedure is Hargreaves Landsdown .
It is only £720 if you pay no income tax when withdrawing it .

ALARA343

Why would pension income trigger NI contributions please?

Marcon

ALARA343 said:

Why would pension income trigger NI contributions please?

It doesn't. OP only needs to consider the tax threshold.

itsmeagain

Marcon said:

ALARA343 said:

Why would pension income trigger NI contributions please?

It doesn't. OP only needs to consider the tax threshold.

It's an implication the OP made and emphasised by putting it in brackets...
"(its this amount so as to stay below the tax threshold and the national insurance threshold.)"

I also don't understand why the OP thinks this?

The value taken per year is also well below the 'normal' personal tax threshold of 12.7k and there should be no NI to pay on pension anyway.
Perhaps there's some missing info?

Dazed_and_C0nfused

I have already taken the TFLS from my 2 sipps and I'm taking a monthly income of £790 from the sipp (its this amount so as to stay below the tax threshold and the national insurance threshold.)

Agree this is odd.

Even if the op has the lower Personal Allowance of £11,310 they are still well under threshold where tax would be payable.

So either there is something they haven't mentioned, that's all they can afford to take without unduly depleting the fund or have maybe got confused with how much can be taken before tax is payable???

Daveinlincoln

Dazed_and_C0nfused said:

I have already taken the TFLS from my 2 sipps and I'm taking a monthly income of £790 from the sipp (its this amount so as to stay below the tax threshold and the national insurance threshold.)

Agree this is odd.

Even if the op has the lower Personal Allowance of £11,310 they are still well under threshold where tax would be payable.

So either there is something they haven't mentioned, that's all they can afford to take without unduly depleting the fund or have maybe got confused with how much can be taken before tax is payable???

Ah, ok my mistake by the looks of things, i thought you had to pay National Insurance on anything over over £9568 and that included money from your pension?...by the looks of the replies here you guys are saying thats not the case?

Thanks as ever for your info.

NannaH

Hargreaves lansdown charge no fees for holding the sipp in cash as long as you leave a balance of £100+

So totally tax free money every year until the age of 75 if your income is low enough.